Senate Advances Tax Break Legislation | AccountingWEB

Senate Advances Tax Break Legislation

The Democrat-controlled Senate took its first step in reviving a plethora of expired tax breaks by advancing a bill on Tuesday that would extend the provisions for two years.

However, the Senate’s bill will most likely hit a roadblock in the Republican-controlled House of Representatives, which is voting on individual tax breaks in an attempt to extend them permanently. The House last Friday voted to permanently extend the business research and development (R&D) tax credit, which would add $156 billion to the deficit. That credit is one of six the Ways and Means Committee voted on April 29 to extend permanently at a total cost of $310 billion.

Senators must cast several more votes before they can pass their bill – dubbed the Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act of 2014 (S. 2260) – which, according to the Congressional Budget Office, would add $84.1 billion to the federal budget deficit over the next decade, Richard Rubin of Bloomberg reported today.

The Senate advanced the legislation this morning 96 to 3, with Republicans Tom Coburn of Oklahoma, Jeff Flake of Arizona, and Mike Lee of Utah voting against beginning debate on the bill, according to an article by Jonathan Weisman of the New York Times.

The EXPIRE Act, which was passed by the Senate Finance Committee on April 3, would extend until 2015 more than 50 of the approximately 55 tax breaks that expired on December 31, 2013, including reductions for R&D, auto-racing tracks, wind energy, multinational corporations, schoolteachers, college tuition, and bonus depreciation for businesses.

The tax breaks are often called “extenders” because they are revived by Congress every year or two.

“Why do we need to pass this bill now? Because if the Senate doesn’t act, veterans who pack job fairs in cities across the country will face an even tougher struggle finding employment,” Senate Finance Committee Chairman Ron Wyden (D-OR) said during his floor statement today. “Because the jobs most essential to our economy – the good-paying, innovation-driven jobs needed to underpin the middle class – will be harder to create. Because just when underwater homeowners get hold of a life raft that keeps them in their homes, a big tax hit could yank it away. Because millions of students already up to their eyeballs in debt will have to go even deeper. And because producing clean energy will grow more expensive, risking high-tech jobs that Congress should be fighting to protect. The EXPIRE Act addresses all of these issues – and more.”

Wyden believes that the bill can create the space needed for true tax reform by providing some certainty to businesses and families for the next two years.

“Simply dropping these incentives sacrifices valuable priorities without getting the real job of comprehensive reform done. That’s why we need to pass the EXPIRE Act,” he continued. “By doing so, we’ll be helping promote growth, investment, and innovation, while building a bridge to tax reform.”

Flake, one of the three Republicans who voted against advancing the bill on Tuesday, said the wind-energy production tax credit should be removed from the bill, calling it a “zombie credit” because it has been revived eight times over the past 22 years.

“Do we really need a ninth extension? Wouldn’t it be more intellectually honest to decide if this government policy is worth it – to simply permanently renew it? Yet we go through this exercise year after year,” he said. “Instead of extending an energy subsidy that picks winners and losers, and credits that create market inefficiency, Congress should eliminate the production tax credit and support an energy policy that encourages entrepreneurs to satisfy demand by providing consumers with alternative sources of energy.”

Some votes before the bill’s final passage will require support from at least 60 lawmakers, which means approximately five Senate Republicans would need to join with Democrats, Bloomberg reported.

Related articles:

Finance Committee OKs Extending Most Expired Tax Breaks
R&D Tax Credit Bill Moves Through House

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